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AMA PolicyPal

This AMA will be held LIVE on Wednesday, 18 Nov 2020 from 7-9pm. Start asking your questions here!

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AMA PolicyPal

PolicyPal

Are you willing to share what your financial portfolio look like? Or if not so specifically, maybe can share what percentage of it is being made up by different financial asset classes?
1. Endowus (39%) +7.29% (in SGD) - Cash Advised Portfolio (100% Equities) - Dimensional Pacific Basin Small Companies Fund - Dimensional Emerging Markets Large Cap Core Equity Fund - Dimensional Global Core Equity Fund - LionGlobal Infinity US 500 Stock Index Fund - Fund Smart (100% Equities) - FSSA Regional China Fund (50%) - FSSA Dividend Advantage Fund (20%) - Nikko AM Shenton Global Opportunities Fund (10%) - LionGlobal Infinity Global Stock Index Fund (5%) - PineBridge Asia ex Japan Small Cap Equity Fund (5%) - Schroder Global Emerging Markets Opportunities Fund (5%) - UOB United Global Quality Growth Fund (5%) 2. US Stocks (23%) +31.34% (in USD) - Tesla (TSLA) - Nio (NIO) 3. AutoWealth (21%) +11.71% (in USD) / +7.81% (in SGD) - Level 4 (80% Equities, 20% Bonds) - Vanguard Total Stock Market Index Fund ETF Shares (VTI) - Vanguard European Stock Index Fund ETF Shares (VGK) - Vanguard Pacific Stock Index Fund ETF Shares (VPL) - Vanguard Emerging Markets Stock Index Fund ETF Shares (VWO) - iShares 7-10 Year Treasury Bond ETF (IEF) - SPDR Bloomberg Barclays International Treasury Bond ETF (BWX) 4. SG Stocks (17%) -1.84% (in SGD) - SATS (S58) I bought SATS in January before the March crash, looking forward to offloading it once it reaches $4.50. For US stocks, some stocks on my watchlist are Alibaba, Sea Ltd, ARKK ETF, and a couple of others. My plan is to exit the SG market, use both Endowus and AutoWealth for passive investment, and allocate a small portion to the US market where I do individual stock picking (for growth).

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AMA PolicyPal

PolicyPal

Fresh Graduates

Entrepreneurship

Career

What's your recommendation for a business graduate who wants to build a tech startup?
Hi Anon, The most important thing to remember as an entrepreneur is that it is never easy. As many other successful entrepreneurs would share, you are bound to encounter setbacks and failures. The key thing is to always keep going and never lose the desire and belief. When I first started, I made an effort to speak to as many people as possible. Never be shy to share your idea. You will be surprised by the insights you can gain by speaking to more people. Another important thing is to find a mentor. Finding a good mentor can help a founder feel less lonely. A good mentor can help to provide sound input as you grow your startup. As with all relationships, it can't be forced. While finding good mentors is never easy, it is something that will help you in the long run.

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AMA PolicyPal

Personal Finance 101

Investments

What are your biggest investment or personal finance pet-peeves?
Hi Clara, For investments, there is no sure-win method for anyone. Some may prefer short term whereas, some prefer long term investments. There is no right answer to it. Personally, I do not agree with short term investing. I believe in a long term approach for investment and we should not be motivated by short term gains. Short term gain is triggered by the market sentiments at the point of time, and not a full reflection of the fundamentals of the investments. It is also important to have conducted your research and have a firm understanding of what you are investing in. Never invest in something that you are unsure of. As a general rule of thumb, I set a budget for my income so that I will abide by it. This allows me to better plan my finances and prevent me from having unnecessary expenses. By using the simple budgeting rule, 50/30/20, I will save up at least 20% of my take-home salary, spend 50% on my needs and 30% on my wants. Another of my personal finance pet-peeve is to leave my money lying around without maximising its potential. For example, I would very much prefer to place my money in a savings plan where I can earn higher interest, compared to what you can get from many bank savings accounts. A great option you can consider would be GIGANTIQ, an insurance savings plan underwritten and issued by Etiqa which I used to store my emergency fund. With a flexible withdrawal, it provides me with the opportunities to earn a decent return while still having the flexibility to withdraw the funds should I require them.

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AMA PolicyPal

Insurance

I'm a mum-to-be. Is it critical to get maternity insurance plans? Understand that PolicyPal provides maternity insurance plans too, any recommendations?
Hi anon, Maternity insurance provides coverage for risks such as preganncy complications and congenital illnesses, all of which have a low (but not zero) chance of occuring. Thus, this peace of mind knowing that any such events will be covered is one of the key reasons to get a maternity plan (standalone ones). However, as plans evolve over time, we have seen the emergence of bundled plans whereby a maternity plan is bundled with another plan that provides protection or some savings elements. In my view, one of the most relevant type of plan in this aspect are maternity plans that are bundled with transferrable whole of life CI coverage to the newborn without the need for further medical underwriting. This allows the newborn to have CI coverage from young. What's the point of having this, you may ask? Surely a newborn has no need for income replacement? However, we often take things for granted and one of the biggest things that we take for granted is health. Thus, if over time, a child develops conditions such as SLE or polycystic kidney disease, he/she might no longer insurable for life. Having critical illness coverage right from the start will ensure that the child has something to fall back on later on in life. This should however, be something that is considered only if it fits the budget, as the premiums are payable for 10 to 20 years. Many insurers have such plans, so speak to an independent financial advisor to understand more about your options.

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AMA PolicyPal

Insurance

PolicyPal

Fresh Graduates

Hi Val, I am a fresh grad and looking to start buying insurance gradually since I don't have any now and am looking to pay for my own insurance. What are the different types of insurance plans?
Hi anon, If you have already settled your emergency funds, then in order of importance, here is what you should be looking at: 1. Hospitalization plan. This covers any hospital bills and associated pre/post hospitalization costs. This would be from an integrated shield plan, with a rider to take care of the deductible/co-insurance. Depending on your budget, you can take a private hospital plan and downgrade later, or just go for Goverment A ward. 2. Critical Illness coverage. This provides a sum of money for you to cover your expenses and other out of pocket costs should you fall critically ill and are not able to work. Usually recommended to cover at least 5 years of expenses and an additional sum to cover out of pocket. This is usually via a limited payment life plan, or a term plan, depending on your budget/needs 3. Death coverage. This provides a lump sum of money should something happen to you. Not mandatory if you have no dependents or liabilities. Usually takes the form of a term plan. For the coverage amount, you could use a multiple such as 10 x of your current income, or calculate based on your current liabilities. 4. Personal Accident. For the minor stuff like TCM claims, etc. Generally, you should not have to spend more than 10% of your income on coverage. You can work with an independent financial advisor who can provide multiple options and explain in detail what you will need to know about the types of insurance as well as the options from various insurers before you come to a decision, especially with respect to cost effectiveness as well as the minor differences between the plans. You will want to be comfortable to share your fiinancial details with your advisor as that will be important for the advisor to consider your current situation before suggesting suitable solutions.

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AMA PolicyPal

PolicyPal

Insurance

What are your thoughts on female insurance premiums are more expensive than males because the former statistically live longer. Is it fair?
Hi anon, For death/TPD, statistically women live longer and thus premiums on death/TPD will be lower than that of males, regardless of whether you are talking about term or whole life. However, this also means that the chances of contracting a CI are higher and thus CI premiums tend to be higher for women. For long term care, women's premiums will also tend to be higher as they are likely to live longer than men if they are severely disabled. Since insurance is a transfer of risk from the insured to the insurer, and the risks are higher for some categories and lower for others, it makes sense that the insurance premmiums are adjusted accordingly.

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AMA PolicyPal

Insurance

CPF

Personally, do you use CPF to pay for insurance? Is this a good approach or should our CPF be only used for our savings since that is our retirement fund?
Hi anon, CPF was first created to assist people with their retirement needs. Over time, the allowed uses of CPF has been expanded to include housing, medical and education needs. I suppose you could say that if a catastrophic event occurs (such as a major hospitalization), insurance covering the bulk of the costs will ensure that the affect person won't have to dig deep into his/her savings or rely on family support to cope with the huge financial costs. This preserves one's funds for retirement. Imagine if we did not have medishield life, but instead could use CPF monies for hospital bills. Healthy people would have a lot of monies in their CPF, but those who were unfortunately stricken with a huge bill would have their CPF wiped out. Insurance equalizes this by ensuring those that are healthy would have a peace of mind, and those who were unfortunate to be saddled with a hospital bill would not have their life savings wiped out. So I would say that using CPF for insurance is in a way buying protection for your retirement funds, and I would thus do so. Furthermore, the idea of not having to pay hard cash is appealing to most people since cash is king.

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AMA PolicyPal

Besides DPS, CareShield, HPS, and Shield plan, are there other types of insurance that we can buy with our CPF fund?
Hi Hen dro, Here's what insurance you can buy with CPF Monies CPF OA : DPS, HPS (in full) CPF SA : May be used to pay for DPS as well (in full) CPF MA : Medishield Life (in full), Eldershield/Careshield Life (in full), Integrated Shield Plan (limits apply depending on your age band, $300/$600/$900/yr depending on your age) and Eldershield supplements/Careshield Life supplements ($600 per person per calendar year) You may also buy single premium ILPs with CPF OA/SA but those are not structured to provide protection elements.

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AMA PolicyPal

Supplementary Retirement Scheme (SRS)

Hi Val, may I know what is SRS and how does that affect me?
Hi Anon, The Supplementary Retirement Scheme (SRS) is a voluntary scheme to encourage individuals to save for retirement and the contributions for SRS are eligible for tax relief. It allows you to save on your tax payable. However, any amount contributed to SRS cannot be withdrawn until the retirement age if not a penalty of 5% will be imposed. IRAS:- https://www.iras.gov.sg/irashome/Schemes/Individuals/Supplementary-Retirement-Scheme--SRS-/

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AMA PolicyPal

I saw 3 types of CI plans ie AIA Power Critical Cover, AXA Super Criticare, & Prudential PRUActive Protect from Business Times. How do these 3 types of insurance plan differ from each other?
Hi Hen Dro, Each of these plans has its own unique feature and each one of us has our own needs, hence our needs need to be properly assessed with a licensed financial advisor to find out more on which plans is more suitable. For example, AIA Power Critical Cover protects you from as early as the detection of chronic conditions to the diagnosis of 150 critical illnesses. PRUActive Payout can potentially let policyholders receive monthly payouts between $100 to $5,000 for a period of either 1, 2 or 3 years on top of your lump sum payout when diagnosed with a critical illness. AXA has a unique diabetes care program, to help diabetic patient recuperate. If we choose to cover until 100 years old, AIA has surrender value available. Surrender value is only available from age 75 onwards, and if we have made any claims beforehand, the surrender value has to less any critical illness benefits paid. Everyone needs differ based on your lifestyle, it is recommended to speak to a financial adviser before you commit to a new policy. At PolicyPal, we work with a range of financial advisers to help you with your protection and financial needs.

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